Republican leaders in the House of Representatives, facing a conservative revolt, have put off a vote on a bill to increase the government's debt limit, cut federal spending and avoid a potential US default.
Republican leaders in the lower chamber announced their decision to not hold a vote on Thursday night after abruptly halting debate on the legislation and plunging into an intensive round of meetings with rebellious conservatives.
The decision created fresh turmoil as a divided US government riven struggled to head off a default threatened after next Tuesday that would leave the Treasury without the funds needed to pay all its bills.
One option under review was to wait for the Democratic-controlled Senate to pass legislation first, a reversal in Republican strategy that would increase President Barack Obama's leverage.
House Speaker John Boehner and other Republican leaders had laboured furiously to line up the votes the debt bill would need to pass the House. Enough conservative Republicans, initially opposed to the Boehner bill, had been thought to have agreed to back the measure earlier.
Mr Obama has threatened to veto the House bill and Senate Democrats stood by ready to scuttle the bill - if it ever got them - as a way of forcing Republicans to accept changes sought by Mr Obama.
The key stumbling block at this point, beyond the unexpected delay, is the House Republicans' insistence that raising the debt ceiling, thereby preventing an unprecedented US default, should be contingent upon returning to the issue early next year.
That would thrust the heated issue into the midst of the 2012 election campaign. Mr Obama, who faces re-election, has insisted that the ceiling be increased sufficiently to push the issue beyond the 2012 vote.
Democratic Representative Debbie Wasserman Schultz savaged the House bill as a "Republican plan for default". She said the Republicans hoped to "hold our economy hostage while forcing an ideological agenda" on the country.
Fears that the deadlock on raising the country's cap on borrowing will not be broken forced global stock markets down yet again as investors worried that a dysfunctional Congress might remain gridlocked past the Tuesday deadline.